Mississippi Seed Fund

The Mississippi Seed Fund is managed by Innovate Mississippi. Innovate Mississippi provides high-tech, startup companies with access to pre-seed financing, early-stage risk capital and product development capital to stimulate and accelerate the development of high-performance, technology-based business ventures in Mississippi. The Seed Fund consists of the Proof of Concept, Research and Development, and New Technology Business programs.

Frequently Asked Questions:

Who is eligible?

Eligible applicants must be in the process of commercializing advanced technology. (Advanced technology is defined as a state-of-the-art proprietary product, process, material, design and/or know-how.) Industries assisted by the program include, but are not limited to:

Life sciences

Information technologies

Communications technologies

Aerospace

Electronics and related fields

Materials

Robotics

Medical devices and instruments

Telecommunications

Agri-sciences

Energy service and related firms developing a proprietary product or technology for these industries are also eligible to compete for program funds.

Eligible companies must be technology-based, sufficiently innovative to provide a competitive advantage in the marketplace and have the potential for significant, high performance growth. (High performance is defined as value added per employee, sales per employee, revenues per employee and/or employment levels per sales exceeding the national average for the industry sector.)

Must applicants be located in Mississippi?

Companies applying for assistance under this program must be located in, or must have relocated to, and be primarily domiciled in Mississippi prior to the receipt of program funds.

What size companies are eligible?

Eligible applicants must be classified as small businesses in accordance with the U.S. Small Business Administration (no more than 500 employees).

Are companies at any stage of development considered?

The stage of development depends on the type of funds the business is seeking. The Seed Fund provides funding for companies through these programs:

Proof of Concept: This includes pre-seed and seed stages including prototype development, products and market validation.

Research and Development: This requires companies to perform product related research and development with a Mississippi university or community college.

New Technology Business: Eligible companies are in a development stage prior to full production. This is further defined as any stage from product and market validation to business plan implementation and early market sales.

Are all companies eligible to receive funding?

Companies not eligible for funding under this program include:

Retail services

Oil and gas exploration and production franchises

Real estate development, management and investment companies

Any technology or non-technology firms that do not have a proprietary product or service

(Companies will not be disqualified because their customers are in such industries.)

How much is the award?

Proof of Concept: Maximum one-time award of $10,000 Research and Development: Maximum award of $100,000 in any one year, with a $200,000 aggregate limit New Technology Business: Maximum award of $100,000 in any one year, with $200,000 aggregate limit

What kind of match is required?

Eligible companies must leverage $1 of other resources (of which a percentage must be cash) for every $1 of financial assistance requested from the Mississippi Seed Fund. The following list identifies the required minimum match for each program:

Proof of Concept: Minimum 25% cash and up to 75% in-kind

Research and Development: Minimum 50% cash and up to 50% in-kind

New Technology Business: Minimum 50% cash (provided by private investors) and up to 50% in-kind

Cash must be in hand or committed in writing by accredited private investors or lenders to be released coinciding with receipt of program funds. The balance of non-cash matching funds may be in the form of in-kind matching funds. The following types of in-kind matches may be allowed:

Pro-bono services provided to the applicant

Services provided which are paid for with stock rather than cash

Donated rent or work space

Time and resources of the firm and its employees dedicated to the same activities proposed for financial support

Pro-bono, not deferred, compensation by employees

Imputed equivalent or fair market value of equipment donated or used in the project

Direct costs of intellectual property brought to the project as valued by an independent third party

What kind of payback is required and when is it due?

For Proof of Concept awards, the terms of repayment are governed by a non-recourse note, which covers debt terms. For Research and Development and New Technology Business awards, the terms of repayment are governed by a convertible note, which covers both debt and common stock conversion terms. Common debt terms for all programs:

The maximum term is five years (60 months).

If repaid within 36 months, only the amount of the award is due.

If repaid between the 37th and 60th month, the amount due rises proportionally to twice the amount of the award in the 60th month.

Stock conversion terms for Research and Development and New Technology Business programs: Innovate Mississippi may convert the amount of the award into shares of company common stock during the term of the agreement, should the conversion appear to be in the best interests of the Seed Fund. A conversion may take place either when a stock price is established in a new round of equity financing or by a professional company valuation completed in the 60th month of the agreement. In general, the number of shares is determined by discounting the new stock price by 10% per year for the number of years since the agreement date, then dividing the award amount by the discounted price.

How do I get the money?

Potential applicants will meet with Innovate Mississippi staff to present their business plans and funding proposal. Once a proposal meets Innovate Mississippi application standards, the applicant will be formally invited to apply to the Seed Fund. A completed application and required documents, including a business plan or product development plan (R&D), will be filed with the Seed Fund program manager. Innovate Mississippi staff will then review the application, business plan and documents for completeness and compliance with eligibility requirements. Those applications and business plans that meet the standard criteria will be forwarded to an expert, third party reviewer for analysis and scoring. Once due diligence is complete, applications will be presented to the Seed Fund Investment Board for a final decision. Upon approval, the Seed Fund Agreement and Note will be prepared and signed by both parties. Draws on the award will be made on a reimbursement basis.

How do I get started?

Contact Innovate Mississippi at 601-960-3610 to set up an in-person or phone meeting to discuss your company’s plans. Innovate Mississippi staff can provide guidance in developing business strategies and also help applicants identify service providers to assist them. Applicants are encouraged to use these resources to help them prepare successful application materials.